Reply #15: I think people weren't aware that the meaning of *applying* for a bank loan had changed

[renate]

I took a money management course in college, lo these many years ago, and was told that a bank wouldn't give me a loan unless I qualified for it. I don't remember any headlines or any public service announcement saying that banks had basically given up on that process... so I assume that many of the people who "qualified" for adjustable rate loans took it in good faith that, if the bank said they were a good credit risk, they weren't being irresponsible in buying a big fat house. After all, banks don't hand out big chunks of change to just anybody, right?

Most people don't speak money the way that most people don't speak French. If you hire a French translator, or if you hire a bank loan officer, you assume they know what they're doing, especially if they have a track record of high standards.

Sure, those of us who took a money management course could probably figure out that the banks were making a mistake. But it seems kind of harsh to punish all the buyers who were only doing what generations of Americans had been told--to own your own home--for trusting that the professionals at the bank knew what they were doing.